Timber Supply and Demand: How trends will affect merchants in 2014

Published Friday 04th July 2014

Timber is an industry that has had
numerous ups and downs over recent years. Although slightly lower volumes of timber
had been purchased by consumers over 2012-2013, the fact remains that it’s
important to keep on top of previous trends in order to ascertain upcoming
trends over 2014 and beyond.

Here are some interesting statistics relating
to consumption by volume/value over the past few years:

·
2007 (pre-recession) saw the highest
amount of wood consumption in the UK. In terms of m³, this approached 18,000.
The lowest point occurred mid-recession where consumption fell to 13,000 m³

·
In 2012 the consumption rate was
considered relatively flat, holding at 13,400 m³

·
2012 saw a 4.6% fall in overall
timber and panel value.

·
This fall was derived from an almost
2% drop in volume and 3% decline in the average price of timber.

Worldwide Picture

The timber industry as a whole has
been affected in some way or another by these trends. Whilst areas such as
mainland Europe and Asia have seen an increase in volume over the past few
years, the US has been affected to a larger degree with a large drop in volume.
However, this is negated by the fact that UK consumption of wood imported from
the states comprises less than 2%.

More important is the telling figure
of a -5.5% drop in UK volume. For merchants, this presents a significant risk
when you consider that UK- produced timber accounts for almost
45% of total consumption.

America has seen less particleboard
and softwood production, which has meant a drop in value, whilst Asia has seen
an increase in plywood and hardwoods. This has led to an increase in the value
of these types.

Trends for 2014 – Supply Not Matching
Demand

Although Europe has also seen an
increase in Softwoods, the trends are pointing to pressure from suppliers to
meet demand through to the end of 2014. Merchants are advised to ensure they
have strong partnerships with their suppliers to maintain stable supply routes.

On a positive note, despite recent
drops in value in regions throughout the world, the overall demand for timber
is steadily rising. This is contributed also in part from the recent news that
Canada is struggling to meet worldwide demand at the moment. China, who is a major
customer is now having to
purchase via Scandinavian routes instead.

How does this affect UK merchants?
Consider that the UK construction industry is advancing a substantial pace now.
More housing, commercial and engineering properties mean that demand is only
going upwards. So we know that a continuous supply of timber for the UK is
priority, and the country has traditionally sourced much of this from Europe.
More specifically, the Nordic region and Scandinavia.

Furthermore, the recession forced
a lot of sawmill closures in these regions. Capacity went
down now it’s proving difficult to get it back on par with the demand being
made now. This demand is exacerbated by larger countries such as China.
Merchants are again recommended to review their supply network to ensure it
remains viable and protected.

The bad news in the short term is
that prices will most likely be rising due to this. Supply is still well below
demand. Which means price increases all across the board.

Safe and sustainable

In times of low supply, regardless of
the industry, it opens honest merchants up to risk from illegal supplies. When
it comes to timber, it’s vital that you do not purchase supplies without the
appropriate security of supply, chain of custody, CE markings and up to date
legislation paperwork. Several important pieces of information should be kept
and given to keep merchants on the right side of the law. For example, the
following should always be completed by merchants when it comes to timber
traceability:

1. To identify the operators or the
traders who have supplied the timber and timber products.
2. To identify, where applicable, the traders to whom you have supplied timber
and timber products.
3. To keep this information for at least five years and provide it to competent
authorities if they so request.

These trends are certainly going to
put a strain on resources, which is why it is important that you keep your
customers trusting you at all times. By choosing a reputable timber company
that maintains a regular supply network, you are safeguarding the industry as a
whole, aiding in its continued recovery.

Your Turn

Do you have any thoughts on market
trends in the industry? If so, be sure to give us a shout on Twitter - we always love to hear
what you have to say.

If you're looking for the best
impartial advice on the most effective way to deal or work with timber and
services within the industry services, why not get in touch for
an informal chat today?

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